CT Bans State Bitcoin Investments

Connecticut Governor Signs Law Banning State Bitcoin and Crypto Reserves

Connecticut has joined a small group of states restricting government cryptocurrency investments. Governor Ned Lamont recently signed House Bill 7082 (HB 7082) into law, effectively preventing the state and its municipalities from purchasing, holding, or investing in Bitcoin or other cryptocurrencies.

Key Takeaways:

• Connecticut now prohibits state and local entities from acquiring or holding any Bitcoin or crypto reserves.
• The new legislation significantly limits the state's involvement with digital assets.

HB 7082, introduced earlier this year, comprises broader reforms regulating money transmission businesses and digital financial services. A key provision explicitly states:

“Neither the state nor any political subdivision of the state shall accept or require payment in the form of virtual currency for an amount due to the state or the political subdivision, or purchase, hold, invest in, or establish a reserve of virtual currency.”

The definition of "virtual currency" includes decentralized assets like Bitcoin and Ethereum, as well as centralized tokens. This comprehensive ban prevents any state or local government use of crypto, including tax payments and blockchain payment pilots. Beyond the investment ban, HB 7082 updates Connecticut's money transmission laws to encompass digital wallets, virtual currency kiosks, and the custody or transfer of digital assets. Businesses handling virtual currency will need to obtain licenses (unless exempt) and maintain a 1:1 reserve. Stricter compliance standards, improved consumer disclosures, and limitations on the use of customer assets are also included.

This decision contrasts with recent actions in Arizona. While Governor Katie Hobbs vetoed a bill allowing Bitcoin investments, she did sign another establishing a reserve fund for crypto assets acquired through airdrops, staking, or interest. Connecticut's approach is more restrictive, completely prohibiting cryptocurrencies for payments and state-level financial operations.

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